THE IMPACT OF CAPITAL FLIGHT ON ECONOMIC GROWTH IN NIGERIA

ABSTRACT This research work presents an empirical analysis of the impact of capital flight on Nigeria’s economic growth. The research work made use of secondary data sourced from Central Bank Statistical Bulletin and Nigerian Bureau of Statistics. The empirical measurement covers the sample period between 1986 and 2022. The study employed recent econometric tools such as Auto-Regressive Distributive Lag (ARDL), Co-integration test, Pairwise granger causality test and descriptive statistics to carry out an extensive analysis of the adopted variables which includes Gross Domestic Product, Capital flight, change in Foreign reserve, Foreign direct investment, labor and capital. The study establish a significant negative long run relationship between capital flight and economy growth and a strong positive short run relation to the fact that, capital flow from Nigeria, due to a weak policies in the country, serves as incentive for investors who bring their resources into the country. So as to get access to profit which is later repatriated back to the host nation and these activities could in turn lead to a very high negative relationship in the long-run, thereby hampering economic growth in the long-run. The study recommends that, the relevant authorities should pay more attention than ever to the issue of capital flight in order to stem it’s counter-productive effects on economic growth, it also suggest the diversification of Nigeria economy so as to reduce the over dependence on oil. ix